NetSuite Currency Revaluation Enhancer

View the detail related to native NetSuite currency revaluations for non-A/R and non-A/P accounts

Introduction

The native functionality of NetSuite lacks the capability to offer a detailed analysis of currency revaluations affecting financial accounts beyond Accounts Receivable and Accounts Payable. This article and video below describe how we bridge this gap using our Prolecto Currency Revaluation Enhancer, offering a comprehensive and clear breakdown of these currency revaluation impacts, categorizing them by each Customer or Vendor referenced on the source foreign currency transactions.

This innovative tool is specifically tailored for NetSuite setups that execute currency revaluations across a broader range of account types, not just limited to Accounts Receivable and Accounts Payable.

Please see this 4-minute video below to understand how the tool works, and the description and background in the article below.

NetSuite Currency Revaluation Enhancer Video

Common NetSuite use case for Unrealized Currency Gain/Loss interpretation

The need to provide a more detailed breakdown on Currency Revaluation Gains and Losses occurs when businesses choose not to record Intercompany Assets and Liabilities using standard A/R (Accounts Receivable) or A/P (Accounts Payable) types. While NetSuite’s Intercompany Framework generally advocates for the use of A/R and A/P accounts for these purposes, this approach can introduce certain limitations. For instance, it necessitates the mandatory tagging of transactions for Elimination. Consequently, NetSuite automatically eliminates these at the Period End, a process some companies might find restrictive.

Certain organizations prefer the flexibility of manually processing elimination entries. They also seek the discretion to decide which Intercompany transactions should be marked for Elimination. Therefore, in NetSuite, an Account representing an Intercompany Receivable or Payable might not be configured as an A/R or A/P account. Instead, it could be categorized as “Other Current Asset” or “Other Current Liability.”

However, this choice of Account Type brings its own set of challenges. Specifically, when such an Account undergoes Revaluation for Currency Gains and Losses, NetSuite does not offer a detailed breakdown by individual Entity or any other specific metric. The system consolidates the effects of Currency Revaluation, lacking traceability to a particular entity. This is in contrast to the scenario where the account type is set as A/R or A/P.

Solution for Enhanced NetSuite Currency Revaluation Breakdown

To solve this problem, we introduce a custom transaction type which acts to reclassify NetSuite’s native currency revaluation to source entities, allowing the user to craft a full subledger showing the balances by entity, including adjustments attributable to Currency Revaluation. The following elements are included in the tool and help control the environment so that predictable results are produced:

• Flag on the Account record to identify which GL accounts we should look for to perform the reclassification
• A custom “control record” for each period with sublists for the native currency revaluations and the custom transactions, so that the user can observe what the tool has processed each month and easily compare the custom transactions to the native ones
• A custom Transaction Type that acts to back out the native impact caused by currency revaluations and that reclassifies the impacts
• A SQL-based report to test and view the algorithms that the tool is based on, providing insight into the detailed transactions that were revalued natively and reclassed using our custom transactions

NetSuite Patterns for Aggregation and Subledgers

In designing the solution for Currency Revaluation enhancement, I recognized a familiar pattern in NetSuite when it comes to subledger reporting. As described in my previous post: Netsuite Subledgers: Challenges and Opportunities, NetSuite offers traditional subledger Aging reports for A/R and A/P accounts, but there are many other accounts that warrant subledger-style reporting. Some examples are Prepayment and Customer Deposit accounts. Companies often struggle to demystify the balances that are represented in these accounts. The key to getting meaningful reports that explain balances in any General Ledger account is having a consistent classification method for the transactions that comprise account balances. By respecting source transaction entity classification, the Currency Revaluation Enhancer tool offers a welcome breakthrough in expanding subledger reporting capacity beyond A/R and A/P.

Conclusion

I am grateful for my friends and colleagues Heidi, Jonathan, and Chidi at Prolecto Resources, Inc. for helping to craft and develop the solution. If you found this article informative or if you would like to learn more about how Prolecto can help you supercharge your NetSuite environment, please feel free to reach out!